Limits of Chinese power by Evelyn Goh - 30 April 2011

That China is one of the most powerful states in the world is no longer a contested claim, but cataloguing China’s increasing material resources does not in itself demonstrate that China is powerful.

A more telling question is how effectively does China convert its growing resources into influence over other states’ strategic choices and the outcomes of events?

Southeast Asia presents an apparently “easy” case for investigating China’s rising power. Given the significant asymmetry of power, if China’s power has indeed grown, we would expect to see altered preferences and behavior of these weaker neighbours in response to coercion, persuasion or inducement from China. Results so far are mixed. While China has been able to harness much of the region’s economic energy in a favorable direction, it does get its way in territorial and resource conflicts.

China’s burgeoning economic rise has restructured economic networks in East Asia, fueling regional production for China as the final assembly and export point to the rest of the world. The Chinese government has also tried to consolidate its economic leadership position by driving broader economic regionalism.

In less-developed mainland Southeast Asia, China’s participation has made feasible region-wide economic development plans for the Greater Mekong Subregion initiative of the Asian Development Bank, drawing international investment for infrastructural projects. These connect the poorer states – Cambodia, Laos and Vietnam – to the markets of China and Thailand, while improving China’s access to raw material supplies and ports in the Indian Ocean and East China Sea. These schemes have also spurred Japanese and American interest and investment in Mekong regionalism. More prominently, China’s initiative for a free trade agreement with ASEAN overcame the nagging problem of galvanising an economic integration project. When it came into effect in 2010, the China-ASEAN Free Trade Agreement formed the world’s largest free trade area, comprising 1.9 billion consumers and US$4.3 trillion in trade.

Southeast Asian states were unable to achieve effective regional economic integration because of the Cold War and competitive economic profiles in low-cost manufacturing. China has lent weight and momentum to translating their shared developmental imperative into regional economic integration. It exercises power via a multiplier effect: The size of its manufacturing sector produces economies of scale, and its political clout lends significance, even legitimacy, to the enterprise.

While such a multiplier role is crucial to China’s political successes in Southeast Asia, it paradoxically does not provide the best evidence for China’s influence, because Beijing is mobilising pre-existing shared preferences and does not have to get others to do what they did not want to do.

In contrast, situations in which the pre-existing preferences of other states are unclear or undecided – such as the prominent debate in the 1990s about whether rising China was a threat – present opportunities for China to influence its neighbours by persuading them that its own narrative of the so-called peaceful rise is more accurate and certainly more profitable. Against the gathering discourse about a China threat, an official Chinese campaign took off from the mid-1990s to shape world perceptions of China instead as a benign, responsible great power.

This campaign involved an alternative narrative about China’s cooperative New Security Concept, and its “peaceful rise” or “peaceful development” as it strives for a “harmonious world.” The message was intended to reassure neighbours that China’s resurgence would not threaten their economic or security interests because of its peaceful intentions, limited national capabilities, mutually beneficial development trajectory and pluralist international mindset.

Yet, there are limits to how much policymakers in Southeast Asian states have been reassured regarding the China threat. China’s power to persuade is rooted in its ability to sustain benign policy action. Apart from efforts to offset some of the adverse effects of Chinese economic competition, China’s neighbours are also watching its behaviour in more serious conflicts of interest.

The best way to gauge the conversion of power into influence is in cases where the powerful actor causes another actor to change policy on a significant issue on which they have clashed. In the case of China and Southeast Asia, such issues include policies on Taiwan, defence relations with the US and policies on territorial disputes. On these potential hard cases, it’s difficult to find significant changes in Southeast Asian states’ policies in response to Chinese actions to date.

China’s behaviour in disputes constitutes a critical test of its intentions, and its hard line backfired seriously in that it led to a closing of ranks across Southeast Asia, Japan and the US. Beijing’s actions lend weight to regional pessimists who are not persuaded of its peaceful rise, and sustained coercive action may prompt its neighbours towards the very containment policies that it wishes to avoid.

Having said this, it is worth noting that, so far, there are few good cases of China managing to make Southeast Asian states to do what they otherwise did not want to do. Alongside Beijing’s successful record of persuasion and inducement, it has shown caution in exerting pressure on its neighbours with the most challenging issues. The recent backlash in the South China Sea is likely to make Beijing more cautious. China’s still limited military capacity provides an important explanation, since, particularly in the maritime access and security arena, the presence of the United States still serves as a significant deterrent.